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SOFTS-Cocoa drops 4 pct, sugar pares losses after 3-week low

* Brazil's Unica says October sugar production accelerated

* Arabica coffee prices seen rangebound in short-term

* Cocoa market underpinned by improved grinding outlook

(New throughout, updates prices; adds analyst comment, second byline/dateline)

NEW YORK/LONDON, Oct 24 (Reuters) - Cocoa futures tumbled 4 percent on Wednesday, hitting automatic sell orders as the London and New York markets appeared set to resume their downtrends, while raw sugar on ICE Futures U.S. were little changed in choppy dealings after hitting a three-week low.

Coffee moved lower, joining the commodity complex down as the firm greenback pressured the dollar-denominated markets as dealers eyed signs that Germany's economy continued its decline.

The Thomson Reuters-Jefferies CRB index fell about 0.8 percent, a 2-1/2-month low.

Cocoa futures tumbled late in the session, after failing to extend their recent gains, triggering sell-stops while falling through key levels.

``This looks like a resumption of the downtrend,'' said one U.S. dealers.

ICE December cocoa tumbled $99, or 4 percent, to close at $2,399 per tonne, having on Monday touched $2,526, the highest level since late September. Sell-stops were triggered below $2,450, dealers said.

Liffe March cocoa futures closed down 64 pounds, or 3.9 percent, at 1,559 pounds per tonne, after falling below the 100-day moving average at 1,571 pounds.

``It's technical. There's nothing fundamental here to push the market higher,'' said Nick Gentile, head trader at Atlantic Capital Advisors in New Jersey, referring to the day's weakness in cocoa.

The market recently derived support from an expected rebound in grindings in the current quarter and in early 2013 following weak data for the second and third quarters of this year.

Dealers were also keeping a close watch on the flow of cocoa out of West Africa following the start of main crop seasons earlier this month, particularly in view of major reforms in top grower Ivory Coast.

``We're not convinced supply is going to come as easily as people expected. Rains in West Africa may hamper drying activity, we're not seeing so much activity in bushels and middle men are trying to sort out finances,'' said Macquarie analyst Kona Haque.

Sugar futures were choppy and little changed, with little reaction to data out of top grower Brazil as it was in line with expectations.

Production of sugar from Brazil accelerated earlier this month from late September and the same period a year ago when rains slowed crushing, cane industry association Unica said at 12 p.m. EDT (1600 GMT).

``I think there's a lot of pre-emptive trading beforehand, traders do tend to buy or sell the rumor and the reverse when the figure comes out,'' one London dealer said.

March raws were down 0.01 cent at 19.64 cents a lb by 12:22 p.m. EDT (1622 GMT), after earlier falling to a three-week low of 19.45 cents. December white sugar on Liffe was up $2.50, or 0.5 percent, at $544.50 per tonne.

Arabica coffee futures on ICE were slightly lower with the market and look set to remain rangebound in the near term.

``Coffee's an over supplied market. We could test the $1.30 area. The roasters are not big buyers,'' Gentile said.

December arabicas eased 1.45 cents, or 0.9 percent, at $1.5940 per lb.

The contract hit $1.5715 last week, the lowest level for the front month since Sept. 6.

``Some European roasters will have to come into (physical) markets to buy, but that might impact differentials as opposed to futures. So we'll still be rangebound in the short term,'' Haque said.

NEUTRAL COFFEE

New York December coffee looks neutral in a range of $1.5715 to $1.6385 per lb, and only an escape could point to a future direction, according to Wang Tao.

ICE certified arabica stocks continued their steady climb, reaching the highest level in nearly 2-1/2 years at 2.36 million bags, as of October 23.

January robusta coffee futures eased $3, or 0.2 percent, at $2,055 a tonne.

(Additional reporting by Nigel Hunt in London; editing by William Hardy, Jason Neely and Bob Burgdorfer)